Kiwi rises as traders ponder outcome of EU summit

BUSINESSDESK: The New Zealand rose against the greenback as traders pondered the possible outcomes from the two-day meeting of European leaders in Brussels which will attempt to address the region's debt crisis.

The New Zealand dollar rose to 79.49 US cents at 5pm from 78.97 cents at 5pm yesterday. The trade weighted index climbed to 72.05 from 71.67.

EU leaders will discuss a plan for economic integration in the region.

The blueprint, written by EU President Herman Van Rompuy, focuses on common banking supervision and deposit insurance and a “criteria-based and phased” move toward joint debt issuance.

It also imposes upper limits on budgets and debt levels of nations that use the euro.

"There is perhaps a little bit of positioning ahead of the summit tonight – the kiwi has had a pretty solid day trading up through its resistance levels to 79.60 US cents," said Dan Bell, currency strategist at HiFX.

"My personal view is that we will be disappointed [by the summit] but if there is some positive news we will see a rally in risk currencies."

German Chancellor Angela Merkel is under pressure to more to stem the crisis despite reiterating the view that she “doesn’t see” shared debt in the euro area.

The New Zealand dollar rose to 63.52 euro cents from 63.16 cents in local trading.

The kiwi was little changed after New Zealand business confidence remained positive in June, even as confidence fell across all five of the main sub-sectors, with firms becoming more cautious in the winter months.

A net 13% of survey respondents expect better times for the economy in the year ahead, down from 27% in May, while a net 21% of firms predict their own activity will improve, down 14% to 20%.

"Off shore sentiment continues to drive the New Zealand dollar," Mr Bell said. "It really shows how the local news tends to get ignored."

The Reserve Bank's monetary and credit aggregates are due out tomorrow.

The New Zealand dollar was little changed on 78.57 Australian cents from 78.46 cents at 5pm yesterday. It increased to 63.15 yen from 62.74 yen and rose to 50.99 British pence from 50.51 pence.